Sunday, November 11, 2012

UPDATE: I have written in the post that I believe the scheme is implementable if it is restricted to limit demand and if a key problem of allocation is solved. To the credit of the authors of the proposal, they did not overlook this allocation problem. The solution takes the form of an auction scheme known as VCG ( Annex C of the proposal). If you win a bid for a highly sought after location, you pay a premium over a 'reserve' - this premium is not returned in the cash buy-back. So you can only breakeven or lose money under the NOM scheme. While a competitive mechanism is introduced, prices can still be contained if you restrict who can take part in the auction. Since you can only lose and cannot make a profit from the scheme, I don't see the advantages of this scheme over some variant of a subsidized rental scheme which is easier to administer and move people out of the scheme when they strike it rich and no longer need subsidies anymore.

The problem itself is not too difficult to understand.

In the last 20 years (1990-2009) median household income doubled while property prices more than quadrupled. When this happens, you borrow more to purchase your home and the cost of housing starts to cannibalize your retirement funds or your making it harder for you to achieve a good quality of life as a large part of your income goes to servicing your housing debt. As seen from what happened in Europe, Japan and USA, when housing prices rises too much relative to median income, it causes an expansion of housing debt (credit) that later causes severe economic problems when unsustainable housing prices fall. Over 45% of Singapore home loans have tenures exceeding 30 years[Link] and bank credit has expanded $460B from about $200B just 4 years ago.
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SDP's proposed solution to our housing problems is to have HDB build a class of flats (NOM = non open market) sell it at the cost of building to Singaporeans. To prevent profiteering, owners can only sell the flat back to HDB, I suppose at a roughly the same price adjusted for inflation and depreciation. The whole idea is to eliminate the possibility of huge profits from all parties - the owner and the HDB. Details of the scheme can be found here - SDP suggests selling price of $70K for 2 room flats and $240K for 5 room flats. Owners are not allowed to buy private property when they are on this scheme.

This idea is not completely new. When former Minister Mah was confronted with the problem of rising HDB prices was asked why new HDB flat prices are linked to OM (Open Market) prices. He replied that if there is no link then flat buyers can cash out on the open market making massive profits. He then said that if HDB sold flats cheaply then buyers would have to sell it back to the HDB for the same price to prevent such profits....so this idea did cross his mind.

Because there is no possibility of capital gains on either side, the NOM scheme approximates to a highly subsidized rental scheme in which a 'buyer' locks on to low rentals and chooses when he exits from the lease and get all his capital back. Banks would be ready to lend to such a scheme since it is no risk as the value of the property is guaranteed - they would be willing to lend the full amount and have you service only the monthly interest (since the risk of defaulting on the principal is zero) ...in which case, it looks like a pure subsidized rental scheme, in which you pay rent in the form of interest to the bank. A 'buyer' can also pay the full amount for the property and stays in it for free until he is done with it...he can just return the flat and gets back his entire 'deposit' adjusted for inflation and depreciation back.

Unlike other govts that depend on land sales to fund its annual budget, the Singapore govt today collects enough in tax revenue to fund its budget without proceeds from the sale of land. In Hong Kong, the govt includes proceeds from land sales in its revenue and uses much of it to fund its social programs. The proceeds from land sales which includes land sold to build HDB and private property goes straight into our reserves "filling govt coffers" so there is no question the govt can afford NOM but should our govt actually do something like NOM? Are there better ways to solve our housing problems?

For the lowest income bracket, the HDB already provides rental flats with highly subsided rentals. There is no choice unless we are willing to see homeless people because the rising income gap, rising housing cost and stagnant incomes of low wage earners have priced a segment of the population out of property and rental market. For newly weds and new home buyers, the govt provides grants that are supposed soften the impact of high property prices but the way the housing market has risen in the past decade means these grants are not enough to quell the rising unhappiness.

Singapore has not always been in this unhappy situation when it comes to housing. In the 90s, home prices were indeed affordable. Prices rose but did not become detached from median income and at one point, things were going so well, the HDB thought it could stop building rental flats and tear them down because even those in the lowest income bracket looked like they could have a shot at the Singapore dream of home ownership. But the next 2 decades did not turn out as expected. Today this high housing prices is a threat to the middleclass ...and it has created a growing underclass that cannot afford to own or rent a place. There is no govt in the world that does not intervene in the housing market in cities and completely leave it market forces [public housing around the world]. In Hong Kong, 31% live in heavily subsidized rental flats[Link] and 17% in discounted flats putting roughly half the population in public housing. Without these schemes, you will see about 10-20% of the HK population priced out of the market for decent homes living on the streets or slum housing. The free market is not going to produce a social outcome acceptable by most if not all modern societies. The question is not whether you should intervene but how much intervention is right.

The PAP govt could have kept housing on the right track by adequately supplying the market, regulating mortgage repayment period, putting restrictions on foreign buying and containing the foreign influx. The PAP did little as prices rose and Minister Khaw stepped in to do some of the things that should have been done when when Mah Bow Tan was minister. Whatever the intentions of the PAP govt, the govt coffers filled up as prices rose and the burden on Singaporean families became heavier allowing critics to accuse the govt of building reserves at the expense of Singaporeans. It does not help that the Singapore govt does not use the money for social programmes so Singaporeans see no benefit of those fat coffers built from money 'extracted' from them - Minister Mah made a critical error of saying that selling HDB flats more affordably would be equivalent to "raiding the reserves"[Link]. This remark destroyed any remaining trust that Mah would step up efforts to solve the housing problem. Minister Khaw is now doing what Mah should have done years ago but it really looks too little too late - prices are already too high.

Prices are too high.... so lets solve it by supplying the market with cheap flats with zero cost of land ...make sure nobody profits from it to prevent abuse - what can simpler than this? Unfortunately, unlike preventive medical care, public transport and university education, for housing, you cannot supply all demand for cheap housing. Suppose, the govt decides to give subsidized or free mammograms to Singaporean women above 40 years old, they can set aside the money and resources to meet all demand. But for the housing market this is just not true - the idea of pricing land at zero of near zero is highly problematic. Suppose NOM gets implemented tomorrow. HDB sells 5-room flats in Woodlands, Tiong Bahru and Bedok at the cost of construction, say $200K. The demand for flats in Tiong Bahru will be much higher than the other 2 locations - and you can't meet all the demand for Tiong Bahru because you only have so much land in Tiong Bahru. In a market system, the price of Tiong Bahru flat rises to price out some people and push them to other areas - the difference between a the price of a Tiong Bahru flat and an identical one in Woodlands is price of land. Since you can't meet all demand, you can try to ballot or allocate using a FCFS (first come first serve) queuing allocation so the property goes to those who are willing to queue ...in the case of a ballot system it goes to the person who is luckiest. If you price the Tiong Bahru flat higher to solve the problem, you end up doing the same thing as the market in a less elegant manner.

The NOM scheme is so attractive existing home owners will want to switch to it at some point in time. A person owning a 5 room worth $600K-$800K on the open market will sell it, use $200+K to get a NOM 5-room flat live in it for "free" keep the remaining $400K to $600K, whenever he wants he can get out of NOM and get his $200K back. There is no reason why a person staying in a 4 room flat worth $400K on the market wouldn't want sell it to switch to a 5 room NOM flat costing $200+K and keep the difference Who wouldn't want such a deal? You will see queues building up for sure because such a scheme will attract all existing flat owners who would like to encash their flats at the high prices we are seeing today. The queues will get so bad the scheme will probably fail. You can try to fix this by tightening the criteria for NOM, say by allowing only 1st time buyers to get on-board There is already something similar that the HDB does for 1st time buyers in the form of grants however these grants are not big enough to push 5room flat prices down to the $200+K level to do this the govt would have to give grants upwards of $200K. Since there is no way to meet all demand for these flats, you need apply a criteria to limit the demand - you have to limit and it makes sense to limit it to 1st time buyers to give everyone just one round of benefits from the scheme. Such a scheme will shift almost all the 1st time buyers from 2-4 rooms flats straight to 5 room flats.

There are 27,000 new marriages and the HDB can build about 25-35K flats with the current construction industry resources. If the land cost per 5 room flat is 200K, the govt forgoes $5.4B that is supposed to have gone into our reserves.

Once you get the qualification criteria restrictive enough to limit the demand to match what the HDB can supply and fix the problem of unequal demand for various locations, it looks almost like a free lunch for newly married Singaporeans....at the expense of growing our reserves. If the PAP has been spending the money from the land sales on nursing homes, pensions for the old or medical care for seniors ....then NOM would mean that the govt has to cut down on these to balance its budget and you would think twice about implementing NOM. The money from land sales can potentially to fund other social programs and we have to ask ourselves how we can best optimize our financial resources to maximum the gains for our society.

NOM once implemented becomes almost irreversible. I can't imagine giving one batch such a generous scheme then taking it away from the next.

There are underlying causes of the real estate boom that push prices up so fast relative to median income. The money to chase property up has to come from somewhere...if not from the income of Singaporeans, where was it coming from? Easy credit in the form of low interest rates is one factor, another is foreign speculators/investors and the large influx of foreigners that drove up demand. All of these could have been contained by the govt but nothing was done until the problem became so large. If you look at the housing bubbles around the world from Japan to USA to Spain to Ireland, they have all fallen apart and taken the real economy along with it. One suspect our decision makers and economic planners would like to keep the wheel spinning a little longer by persuading us to keep the door open to the foreign influx - but history has shown you cannot keep bubbles inflated for too long,,,,the bigger the bubble the greater the damage when it starts to deflate. While it is commendable that the SDP put forth a proposal to deal with the high price of property, what we may be grappling with in the coming years may not be the unaffordability of high property prices but the unsustainability of today's high prices....we just need to open our eyes to see what has happened to the economic powerhouses of Japan and US, when the artificial prosperity from high real estate prices vanished.....

Singapore housing prices are now beyond the control of the government unless the government wants to wreck the Singapore economy and international reputation. The reason is simple. There are just not enough land to meet the demand for housing. We have taken in so many foreigners and Singapore is a very attractive place for wealthy people from all over the world. They are the ones who are controlling the property markets. The only way is to ban foreigners from buying Singapore properties and this will be economic suicide.

The housing bubble cannot be deflated in a way that benefits the middle class without destroying the entire financial sector. For me, the easiest way out of asset inflation is to increase Singaporeans wages at the same time, devalue Singapore dollar. At the same time, certain form of capital control must be in place. In this scenario, our wages will remain unchanged with respect to major currencies while the real estate value will drop versus wages.

If PAP really do this thing, there goes our safe haven. No tycoon would want to park their monies in our real estate. And our bankers will go out of jobs tomorrow. That is not really a bad thing. But no elite will shoot themselves on the feet.

However I believe SDP way could be implemented with some modifications. We just have to look at Dubai. Dubai garment reserve the best real estate for its citizen. Dubai citizen got free land in the prime real estate. The limitation is these land can only be traded among citizens with rules and regulations that limits speculations. The land cannot be sold to foreigners.

If Dubai can do it, I dont see why we cant.

Of course, the 'Dubai Style' will again hurt the status quo big time. Before, our elites rely on honest citizen to backstop real estate bubble providing these greedy speculator a price floor. If citizen buyers are removed, the remaining property market players will only be sharks and foreigners. It will increase volatility and would highly lead to a crash.

Real estate bubble once inflated, the government must continue to sacrifice the interest of citizens. There is no easy way out without injury the elite class.

So Lucky, which side are you on? Please clarify yourself. First time I read you writing something that says nothing. It is inconscionable to let the next generation pay for the mistake make by previous generation. The buck has to stop somewhere, tiobo? If you buy your property at too high a price, then that is your own investment mistake. Suck it up!

1. re the idea of selling HDB flats crossed MBT's mind - i disagree. it would be the last thing he and the govt would want. they were hellbent on making money from housing from the time chok tong announced one's home is an asset that would appreciate in price.

3. one solution is for the govt to pay for its mistakes - by giving Much higher grants, like 10 times the amount it does now. it won't cost it a cent from its pocket. it only means it makes a smaller profit.

4. whatever it decides to do, it will have to do something, and soon. a Far larger problem looms - people will have too little money left in their CPF for retirement.so the number of poor is going to grow dramatically.

it won't matter even if pple are willing to work till the day they die. they will not be able to get jobs. also, what will be available in their CPF will not be able to help them have anything but the miserliest of lifestyles.

i sincerely hope it will be the PAP that is stuck with this horrific problem and be forced to dig the country out of this pit, rather than someone else. they created this problem with their stupidity and greed, and should be forced to deal with it.

All boats rise as the tide rises.. anyone out of his mind to like deflating assets may find the west more comfortable, so go west young man! Since the 1960s, our per capita went from 428 to 50,000, gdp from 700 to 259,000 USD; Affluence and rising income/ savings are not problems but rising assets are problems ...the chief complainers complained.

I'm on the side of solutions that will work. I'm not sure if any exists today. Pushing prices down by restricting lending and foreign buying to deflate the market takes us on a familiar pattern already seen on other countries.

If the PAP has nothing better to do than to fill up its coffers, it might as well use this money to subsidize new home buyers. Whether it is NOM or additional grants, it will help the nearly weds...if there is no other plan except to lock this money up in reserves - I'm all for using it to solve Singaporeans' problems but we do not have just one problem...there are many to choose from.

I don't think NOM can scale up and open to everyone because we only have so much capacity in construction and limited resources such as sand.

Lucky Tan, this is one of the best analysis of NOM scheme I've come across. Well done.

You essentially explored what I call the "unintended consequences" of NOM scheme. I alluded to that when I posted comments in other blogs but only after reading your post, I understand better how bad it can be.

The illustration of Tiong Bahru vs other locations is a good one. Similarly, the fact that since price is guaranteed, 100% financing is assured from banks too.

The other unintended consequence is that NOM is such a no brainer because a NOM flat owner can rent out his flat at say, 10% or 20% yield. If I were a married couple in above 35, I'd ask 1 party to buy a NOM flat, and the other party to buy a normal HDB flat. Use the rental from the NOM flat to subsidise the monthly payment on the regular HDB flat.

While I commend SDP for thinking out of the box, I really think the unintended consequences of ths scheme is too prohibitive.

Lucky. Your example about valuations between Tiong Bahru and Woodlands is probably unique here in this country of 76 square kilometres. It is precisely because of HDB's funny valuations that we have $350K 3 room flats that have only balance of 50 years n their lease. How does HDB value new and resale flats is a real mystery.

There are difficulties in implementing, but the longer we drag on the more it seem impossible.

Blame who ? No prizes needed.As pointed out, if the profit made t the govt all this while were not channelled to social programs, what is the problem ?The ruling party will know but cannot tell. National Security / confidential etc.....

I find it mysterious why one of my friends bought a Marine Parade 5-room flat with 60 years left on the lease for $650K...so I asked him. By the time he finish paying it will only have 30+ yrs left.

He told me he is not worried, there will be en-block redevelopment and he will get a spanking new flat when the time comes. Somehow the enbloc redevelopment is implicitly built into the price.

Our lease hold properties have not run its full course. If not for the enblock assumption, the correct valuation should be correlated to the rental income for the remainder of the lease to the present value. If you have 50 year remaining, it should be worth half a 99 year leasehold home. But people are buying and selling these home as if the remaining lease does not matter...the expectation is the govt will step in and do something like en-bloc.

I was wondering if the HDB can keep meeting these expectations - I think it is a problem if they don't and stick strictly to enforce 99-yr leases....

Lucky, I don't think construction capacity should be used as an excuse for not implementing the scheme. The key is in allocating the flats in a fair basis. Example first timers with kids etc. Those who already have a flat can wait. So, your argument is weak. HDB can set rules.

The HDB can set rules decide who goes first who goes 2nd and so on. That is why I suggest to have it to restrict to those who are newly married...the reason why you have to prioritize is you can't satisfy all demand and you cannot please everyone...the question is whether you're even able to please most...given the limited resources.

HDB just has to start somewhere. Just because it can't please most shouldn't be reason that it continue with its mistake. It is just like kicking the can down the road. If it doesn't have the political will, then let another party take over.

"It does not help that the Singapore govt does not use the money for social programmes so Singaporeans see no benefit of those fat coffers built from money 'extracted' from them - Minister Mah made a critical error of saying that selling HDB flats more affordably would be equivalent to "raiding the reserves"[Link]."

In fact, LKY now blames on human nature... he calls it envy. They are now blaming it on globalisation and jealousy.

http://www.youtube.com/watch?v=ihiE4oGyYlQ

I notice that what makes LKY's speeches come off as pretty convincing at surface value is that he makes a lot of implicit assumptions in many of his evaluations. One needs to ask oneself what are these assumptions that he is making and are they valid assumptions?

According to the ex-ex-PM LKY, we have made capital gains 10 times more with his housing policies and people have benefitted. But the stupid point that he misses is that income did not rise 10 times more; an older generation has benefitted from it and going by his assumption, prices of current flats are going to rise by another 10 times for these generation.

Of course not. He is defending that his policies are right and he did not mention anything about his 2-child policy.

I also wish to provide an additional dimension to all this housing shit. To solve the housing problem once and for all, we got to take down SGD as it present form and replace it with gold standard.

We all knew the FED prints monies, not to bail out the average Joe, but to prop up toxic asset and hope that economy will grow. That is to say, FED is robbing the 99% and supporting asset bubbles which enrich the 1%. As USD is the world reserve currency, when FED prints, it creates asset bubbles everywhere.

And SG is not the only country with asset bubble. Everywhere in the world have it.

In SG especially, there is no meritocracy per se. The rich in SG do not make it by their merits but are holding on to the biggest clutch in the universe. The upstream recipient of monies, which is the banks benefited most from the monies printing while you and I suffer. And do not forget, Kwa Geok Choo's father, Kwa Siew Tee is the father of FX in OCBC. LKY will fight to teeth to support banking interest.

Another way to burst asset bubble is to go back gold standard. In gold standard, whenever there is asset bubble, bank will raise interest rate as lending become risky. This creates a feedback loop that lower property. Over the years, while people blame HDB for our woes, many forget that MAS is the key instrument in enabling all the shit of HDB.

It is the responsibility of the government to maintain the liveability of this place and escalating prices of property will not enhance it for the majority of her citizens. The poorest here do not have the option of migrating to a cheaper locale and when more of them do not have housing, the Ho-Lee family will have lost it.

I admit I did miss ont that detail on the aspect of buyback mechanism in Annex C that any thing above reserve is considered pure consumption and is not returned. This is an interesting twist in the scheme to address the allocation issue...but really you put this and all the pieces together how is this different from a subisidised rental scheme....which is what I think scheme approximates to at the end of the day.

You can also auction off rental using VCG and the administration is a lot simpler...and it is a lot easier to exit from the scheme.

I believe the answer to our housing woes lies in curtailing foreign demand, regulating mortgage financing and supplies to the market. At the bottom end, the govt should expand the rental scheme and be more flexible here to remove the long queues.

Sometimes, we forget how we get into this prickly situation in the 1st place. It is important to remember housing prices really started to take off in the 90s (just look at the chart). So exactly, what happened then? It's so simple, cost pricing to market pricing for public housing under the great Goh!

We can argue until the end of the world but those with good memories just need to recall the start of the troubles. Of course, there are always winners and losers in any policy changes. But as my driving instructor always urge me, "look far when you are driving". Similarly, our housing policy needs to look ahead into future generations and how they will be able to afford a house.

So if you have no children and make a few windfalls from the property market since the 90s, then life is sweet. But if you have any children who potentially will give you grandchildren, just consider the rate in which our property price are appreciating yearly, what is going to happen to our descendants? In future, they probably will be spitting at our graves and cursing us as "the bloody greedy old generation"!

I have two reservations on the NOM scheme (NOMS) suggested, which can be overcome by sensible tweaking.

NOMS is going to deprive government of substantive revenue as it can rake in millions of dollar profit from the existing schemes that govern the purchase of flats direct from the HDB as well as from the sale and purchase of flats in the open market. Perhaps NOMS flats can be priced at Construction costs plus 20% profit for the government to mitigate its revenue loss.

At least for the starting phase of the first 5 to10 years, it is best to restrict purchase of NOMS flats to first-timers. Who is a first timer? It may be a young couple getting married or anyone else like a single or single mother – all of whom do not own or have not owned an HDB flat or private property before. This effectively excludes current and ex-HDB flat/private property owners from buying NOMS flats. Any proposal to include others in the scheme can be considered after the experimental phase of the initial 5-10 years.If you are looking for asset enrichment dabble in the open market then and leave NOMS for simple-minded folks who just want affordable housing and stability in life.

"whatever it decides to do, it will have to do something, and soon. a Far larger problem looms - people will have too little money left in their CPF for retirement. so the number of poor is going to grow dramatically."-anon 03:01

That's why the bubble has to pop. Wave of baby boomers being asset rich but cash poor have to sell to buy food. Wave of retirees gonna get bigger & bigger with aging population. More & more sellers & less & less buyers.

With so much debt in global financial system, we are in a long term secular bear market. This is further supported by the retirement of baby boomers around the world. They ain't gonna spend.

We need to reverse foreigners gradually to prevent a large drop in Housing prices and than stabilised it. However, if we continue to up our population via reckless import of foreign speculators and transient Employment pass workers, than we are heading towards a disastrious outcome as Lukcy mentioned - huge bubble waiting to be blown off and send everyone into the sea. I don't trust our leader has the will to change anything yet, they are too weak and lack of confident in making decision. I think they rather enjoy partying now and talk about the problems later.

It's a sticky issue. Here in Tokyo, many of the baby boomers who were caught in the 80s, having to purchase their overinflated prices, are now about to complete their house payments.

The good news is that their houses are sold freehold.

If you speak to some of these japanese folks, they lament having to spend all their lives paying for a house.

In our younge Singaporeans' case, the situation is somewhat dire as their houses are not freehold and they are paying for it all their lives on long 30 year tenures.

Many are compelled to purchase resale flats at today's high prices, particularly those folks who married in the last 5 years. It has nothing to do with them having made bad investments decisions. Rather, the incompetent decisions of a few had thrown them into the situation of today's bubble.

The situation is going to get worse in the next 5 years; after which the government will close the lid on the immigration influx.

Lye Khuen Way said..."We all know why some blocks were SERS. The huge land parcel released can be sold for many times what the tenants will be compensated."

I like to add to what Khuen Way wrote. I know of a cab driver who bought a 3 room flat at Telok Blangah and paid $13 500 for it. He is now in his early 60s. He received a letter from HDB informing him that his block would be enblocked for SERs and he was required to pay $114 000 for this new remade flat, should he wishes to get back this same flat back at Telok Blangah. He was angry and dissappointed. He told me he was surprised that he though he could retire but now he has to drive more hours in his 60s to pay for this post-enblocked SER flat. He went to see his MP who informed him that he doesn't need to worry so much as if he can't meet his monthly installments, his son could help him.

I want to point out that there are strings attached and there are reasons why the details of SERs are not spelt out as who is to say about the housing conditions 20 to 30 years from now.

There are those who believe that prices of houses in Singapore has been rising since 1960 and will continue to do so; albeit at a lower rate of increase.

"He said: "The government cannot, and should not do, try to do everything. It is too impersonal. It can be bureaucratic and help then becomes a matter of social administration, not of care and compassion. And eventually, this fosters an entitlement mentality, instead of a sense of mutual obligation of and of gratitude between the helpers and the helped." LHL

You got to give this guy 10 points for cunningness. He has chosen to sell values to Singaporeans because it is cost-effective for him.

Lucky, on rental, it's possible to do it affordably in name only. For a $170k flat, it's theoretically possible to do $143.10/month and increase it at the inflation rate, so the present value of the income stream is $170k. But that means full utilization, which never happens.

People don't take care of short term rentals like long term ones, especially when long term means for your wntire life and more. More likely there will be an effective rental life of 10 to 20 years. So rates will have to increase by 5 to 20 times to absorb that risk. Then people are worse off. $1.2k/month for 14.5 years gets you the 99 year lease for the NOM flat... At that factors in interest.

I wrote a messy post on this at:http://jeremy-chen.org/blog/201211/non-open-market-flats-affordability-and-aspirations-sdp-public-housing-plan-series

Anyway, the "big idea" is burden sharing. The state uses economies of scale to build and get things to people affordably. The citizenry takes up the full lease and takes that risk off the govt's books. (In the NOM scheme the risk is not fully removed though...) Govt is great with economies of scale, can't handle that level of "inventory risk" though. Citizens are best placed to take on that risk, because its not much of a risk to them....

In this world, there is no such thing as lazy Singaporeans. But thoughout histories, there are no exceptions that elites are corrupt and lazy.

Marx provide a good insights that make all the rich trembles. The above links is really a great epic about Roman Republic. The writer demonstrates clearly how the Roman elites corrupt deliberately the most hardworking, frugal, self-sacrificial Roman people.

""Even if can work, SDP should at least also think how to win over the 60% from PAP first and let the public know.""

60% new citizens or old citizens. sooner or later the price upward spiral will affect everyone or their children. But for some new citizens, they may still support the incumbent so that the liberal immigration will stay liberal for their own kakis to be brought here.

becos it is fun. if some other people can implement policies affecting you and your family, surely it would be alright, at least mininumly, for you to cowpeh and cowbu. why shouldn't we remain here and continue to cowpeh and cowbu when others can continue to screw you.

""Anonymous said... Why don't Singaporeans migrate to other countries with much cheaper housing?""

becos their roots are here. until it reaches a point they tak-boleh tahan and completely given up, they are likely to be here for a long long time.

a lot (many many of them) of people can still tahan (housing commitment completed or at least bought @ low side) but are more concerned about their school going children when they grow up. in times to come, they will form a very big group of cowpeh cowbu.

If tomorrow's adults have no roof over their heads, blame their parents and themselves.They have too much trust in the Leadership to let them led and lead them for five decades.Sinkies deserve the Leaders they placed theirtrust all these years.

L Tan is just one in the minority 40% that chooses to find fault with the leadership and the majority.Frankly, many other bloggers are liked him. They choose to be oblivious to the affluence in their society. Maybe some of them seldom goto the heartland. They are not aware that some Singaporeans staying in 3 and 4 Room HDB drive branded car, visit casinos and travel for leisure frequently.

Even if Singaporean does not live or visit the HDB Estates, there is no reason for them not to see the mushrooming of high end property all over the country. Dont they face traffic jams, have parking problem? Not just lack of parking lot, the space to park is also too small because the lots are occupied by huge guzzlers.

Long queues at restaurants, mobile and property launches are just as common as queue at casinos. Bloggers dont see them?

I do not think SDP's proposal of another class of no frill HDB flat will gain support from people who are used to appreciating assets.If accepted, it will mean there are two classes of HDB flat; one for the better off who stay at OM(open market) which they pay more but can sell at higher price and another class NOM(non open market as proposed by SDP) occupied by the poorer people.In this scenario, in no time, the NOM estates will be like ghetto or slumps. This has happened in the past in the older HDB estates. These estates in Kallang, Tg Bahru, Queenstown have been cleared and new estates with better flat built.The problem in public housing is that it has been politicised. Where else in the world do you have more than 80% of the people staying in public housing.Public housing has become a chip for politician to win votes by winning over the people with carrot of asset enhancement that appreciate 5%,10%,15% and 20% over the years.What politicians promised, public servants will have to delivered. Housing policies have been liberalised over the years so its price can appreciate by leaps and bound and greedy people vote in PAP for more good years.Every one want to apply for HDB flat to make money not so much for occupation. So much so that the true demand for HDB flat is never known!To curtail the unnecessry demand, HDB should stop allowing whole flat to be rented out and turf out private property owner from occupying HDB flats and confine resale to citizens only

There are so many suggestions out there to prevent the frenzy from getting out of hand.

Some are long term measures like forcing all hdb dwellers from owning pte property completely. Period. Know why it is not implemented? Because I suspect quite a few grassroot leaders stay in hdb but own pte pties.

Some are short term measures like shortening the leasehold period to say 60 years and lengthening the minimum occupation period to say 10 yrs. This will bring down hdb prices by a third straightaway & make it so much easier for newly weds to start a family. So 2 problems are solved almost instantly.

But will common sense prevail? Sigh! Probably not because the leadership is unable & unwilling to change its mindset. So that force Singaporeans to seriously think of the only option left on the table

"Even if Singaporean does not live or visit the HDB Estates, there is no reason for them not to see the mushrooming of high end property all over the country."

Precisely, the problem lies with the fact that it is all over the country, more and more buildings and getting worst and worst in terms of space & congested traffic.

High end property, like most things, is a zero sum game. Some sell high and some have to buy high and the latter will pray that it will go higher so that he will not suffer loss. But the effect of higher price will get passed on & get filtered into the prices of other intertwined areas in a complicated & complex dynamics bringing up the costs of operation & living here.

Does anyone know... for the foreign scholars studying and later working here, do they have any NS liabilites of sacrifice like our fellow locals? Becos unlike those others who have gone way past the enlistment age and unstandably unable to, these scholars are young, energetic and able. Is it equitable to everyone?

Not all blame goes to the government.Every sinkies should know that they arethe ones that caused everything to havegone up.Who bidded for COE, Food and Market Stall, HDB Shop, queue overnight for property?

"They had done their best to spoil all the people, who are still very unhappy."

who is spoiling who ? they are paid millions and they still call the shot of not raiding the reserve and still have the final call of when we should be taking out our OWN CPF money. you must have gotten the order wrong.

Not just very affordable.It also allows the buyersto have their(house) valuesenhance by 20 times or morein future. Singaporeans standto make huge profits with theirproperties, so long as foreignersare invited to come to buy them.

What a fantastic deal ! Time to goand queue for the next launch. Be earlyhuh.

HDB is just an improved, highly inflated form of worker dormitory/ slave quarters. HDB estate is just another form of concentration camp. If HDB is so good, why would GIC invest in foreign banks instead of HDB? why would MIWs themselves not stay in one?

Our public housing is v different from public housing in other countries. It's not simply subsidised basic accomodation for poorer people. Ours was started with the intention of ROOTING people to a newly formed country, by letting them "own" a property here.

Same intention was behind many early PAP policies or schemes. The CPF was another.

(So of coz these early schemes are pro-citizens, as the leedership wanted people to LIKE him, and needed them to build up a new nation. Now these schemes have morphed to serve another purpose -- sustaining Singapore, INC.! And newer schemes are pro-foreigners instead, as the leegime now need them to boost their business.)

Anyway, the HDB. And CPF and retirement. What does Woody's "asset enhancement" mean? It just means, if you find yourself unable to retire, or if you fall sick and need expensive medical care, you COULD (hopefully) rent or sell your flat and DOWNGRADE -- not just downgrading your flat but also your life generally -- just to stay "self-reliant" and not burden the gahmen.

The amazing thing is, many people think this is OK!!! At least it's A WAY OUT! And yes, it's also a way out for the gahmen to be just MINIMALLY responsible for its elderly or sick citizens. But, in the first place, if the gahmen had managed housing and medical costs well, they won't have to come up with this "asset enhancement" excuse... O wait... Then how can they hang on to our CPF $ -- ever increasingly -- to upkeep Singapore, Inc.?!

My point: How we see our HDB flats now, and how we want our 'public housing' to be, will determine what price-stabilizing solutions are acceptable to us.

The SDP's NOM, I take it, is based on the premise that public housing is just that -- no frills flats (no more DBSS, EC, Maisonette, etc), cheaply affordable to citizens, with priority for those who need it more. They're solely for owners to STAY in.

This premise is a total change of mindset for many people, esp those who are sold on "asset enhancement". I personally think this is the right direction, and totally agree that public housing pricing should be Non-Open-Market.

The HDB has become complicated over the years. Maybe coz it didn't want to lose 'customers' to private developers, it started to build fancy flats like the DBSS and EC, and less basic flats. And then the HDB have to have v rigid rules on who's eligible to buy what direct from the HDB, and what grants, if any, will be given.

As the rules are v restrictive, and the waiting time v long for a new flat, many turn to the resale market. Meanwhile, the gahmen let in hordes of foreigners and PRs also added to the demand in the resale market, pushing up resale prices, which in turn pushes up new flat prices, as they're market-based.

Our 'public housing' is also different from other countries', as it's the MAIN type of housing here. IF the gahmen were to implement measures to bring HDB flat prices down to, say, the median income level, it will benefit MANY, esp the younger generation.

The people who'll be pissed would be:

1) those who bought at a high price wishing to offload it at an even higher price... Well, they shouldn't 'speculate'! And since they could afford the high price, they should be rather well-off.

2) the private developers, maybe? But hey, for eg, even if HDB flats are much cheaper, those who want to stay in Tiong Bahru but was unlucky in their flat ballot, might be willing to fork out more to buy a private property there. Though I can't see why people must die-die stay in a certain place. (I dunno, I don't think EVERYONE wants Tiong Bahru, some may actually prefer Jurong! Under the NOM, it's also not as if you can hope to SELL your Tiong Bahru flat at a higher price!)

Had the Leadership understands the Meaning and implication of Nationhood. It will never sell out anything that belongs to Native Singaporeans. After all, we are not a nation yet and all the more the Government must ensure that Countrymen are well care for for a healthy nation to be born.

Going all ways out to woo, import aliens and selling Singapore to them is smack of betraying the Citizenry.

When Singapore was given to the local to reign, about five decades ago, there was the call to build a cohesive, peaceful and prosperous nation. Soon after, the Late Minister S Rajaratnam came up with the Pledge that still being recited like coming from digital recorder without feeling.

After five decades, the gestation for nationhood has gone awry and malforms into an aspiration. With the Native Singaporeans fast becoming the minority in the Land, nationhood will likely die in the womb.

The bubble will never burst, just like the opposition will never become government.

Because PAP will remain the government. Maybe for next 99 years, which is as long as the lease of the newest HDB pigeonholes. After that, maybe the opposition will become government and the bubble will also burst.

"The bubble will deflate very, very slowly, not burst suddenly with a pop sound."

No one can know for sure whether the bubble will deflate slowly or burst suddenly which is more likely because people have the tendency to be comfortable of where they are w/o taking corrective action unless they are forced to. It is everyone's greedy interest that it stays high so that they won't suffer loss.

But do we have the underlying economic fundamental to sustain this high price - in short, can the average joe afford to pay off completely the high price of housing even he works very throughout his life. Simple rule of thumbs is using your own household cpf contribution (one or two income earners) and calculate the payback period.

When it comes (bubble bursting), it will come just like that - e.g maybe like the once in 50-yr or 100-yr ponding. Cycle may even get shorter because of many pressure points which are anyone's guess.

"I have come to one firm conviction after these many years of trying to figure out the plain truth of things. The best chance for achieving peace and prosperity, for the maximum number of people worldwide, is to pursue the cause of liberty. If you find this to be a worthwhile message, spread it throughout the land."

Mr Khaw said that if HDB price is not linked to the OM price, there will be a big windfall for the sellers. He missed the other point in that question, which is the OM price is also based on HDB latest price adjustment, so isn't HDB compounding the price inflation indirectly? Over the radio, heard him said the 12% new flat increase is reasonable compared to over 40% in the resales. But, Mr Khaw, how much of the 40% is a result of the 12? 12, 26? How can he keep repeating that he has no control over the price of the resale market? Oh, I forgot. Bonus is a function of GDP growth ...

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